$(0.68) diluted EPS in the fourth quarter compared to $(1.12) diluted EPS
in the year- ago period. Excluding significant items and adjusting for the sale
of Advertising Solutions, EPS was $0.44 versus $0.40, up 10 percent year over
year

For full-year 2012, excluding significant items and adjusting for the sale
of Advertising Solutions, EPS was up 8.5 percent year over year

Record cash from operations of $39.2 billion and record free cash flow for
full-year 2012

$4.4 billion in stock buybacks in the fourth quarter with 126.6 million
shares repurchased; for the full year, the company repurchased 371 million
shares, or about 6 percent of shares outstanding, for $12.8 billion

$23 billion returned to shareowners in 2012 through dividends and share
repurchases

"We had an excellent 2012," said Randall
Stephenson, AT&T chairman and chief executive officer. "We grew
revenues, increased adjusted earnings per share by 8.5 percent and generated
cash from operations at record levels. We used this cash to invest aggressively
in the future of our business and returned $23 billion to shareowners through
dividends and share repurchases.

For the quarter ended December 31, 2012, AT&T's consolidated revenues
totaled $32.6 billion, up 0.2 percent versus the year-earlier quarter and up an
even stronger 2.8 percent when excluding revenues primarily from the divested
Advertising Solutions business unit as well as the impact of Superstorm
Sandy.

Compared with results for the fourth quarter of 2011, operating expenses
were $38.5 billion versus $41.5 billion; operating loss was $6.0 billion,
compared to a loss of $9.0 billion; and AT&T’s operating income margin was
(18.3) percent, compared to (27.7) percent. Excluding previously noted
adjustments, operating expenses were $28.4 billion, compared to an adjusted
$27.5 billion in the year- ago quarter, up 3.3 percent; operating income was
$4.2 billion, flat versus a year ago; and operating income margin was 12.9
percent.

Fourth-quarter 2012 net income attributable to AT&T totaled $(3.9)
billion, or $(0.68) per diluted share, compared to $(6.7) billion, or $(1.12)
per diluted share, in the year-earlier quarter. Excluding adjustments of
$(1.10) from the non-cash actuarial loss on benefit plans, $(0.02) from storm
impacts and adjusted for Advertising Solutions, earnings per share was up 10
percent, $0.44 compared to an adjusted $0.40 in the year-ago quarter.

(The actuarial loss on benefit plans was driven by a reduction in the
discount rate from 5.3 percent to 4.3 percent. While our investment returns
were better than assumptions, they were not enough to offset the lower discount
rate.)

For full year 2012, compared with 2011 results, AT&T's consolidated
revenues totaled $127.4 billion versus $126.7 billion; when excluding the
divested Advertising Solutions business unit, revenues were up 2.4 percent for
the year. Operating expenses were $114.4 billion, compared with $117.5 billion,
down 2.6 percent; net income attributable to AT&T was $7.3 billion versus
$3.9 billion; and earnings per diluted share was $1.25 compared with $0.66.
Excluding adjustments for both years, earnings per share totaled $2.31,
compared with $2.13, an increase of 8.5 percent.

During the quarter, the company repurchased 126.6 million of its shares for
$4.4 billion. AT&T has completed its initial 300 million share repurchase
authorization and began buying back shares on its second 300 million share
repurchase authorization. At the end of the quarter, about 229 million shares
remained on the second authorization. In 2012, the company repurchased 371
million shares, or about 6 percent of outstanding shares, for $12.8
billion.

Outlook

AT&T is well positioned to deliver solid revenue and earnings per share
growth with stable margins while returning substantial value to shareowners in
2013. At the same time, AT&T is investing in future growth with Project
Velocity IP (Project VIP). In 2013, AT&T expects:

Led by investments in Project VIP growth initiatives, capital spending to
be in the $21 billion range with increased spending in wireless and stable
wireline investments;

LTE build to cover 250 million or more of the U.S. population by
yearend;

Free cash flow exceeding $14 billion: and

Completion of the company’s 300 million share repurchase authorization as
early as mid-year, depending upon market conditions.

2013 outlook assumes little improvement in the economy and is adjusted for
impacts from the 2012 sale of Advertising Solutions and other adjustments
including non-cash mark-to-market benefit-plan adjustments.

Wireless Revenues Continue Solid Growth. Total wireless
revenues, which include equipment sales, were up 5.7 percent year over year to
$17.6 billion. Wireless service revenues increased 4.2 percent in the fourth
quarter, to $14.9 billion. Wireless data revenues — driven by mobile Internet
access, access to applications, messaging and related services — increased by
14.7 percent from the year-earlier quarter to $6.8 billion. Data revenue growth
was slowed somewhat by the growth of Mobile Share plans. Fourth-quarter
wireless operating expenses totaled $15.1 billion, up 6.9 percent versus the
year- earlier quarter, driven by record smartphone volumes, and wireless
operating income was $2.6 billion, down 1.2 percent year over year.

Strongest Postpaid Net Adds in Three Years. AT&T posted
a net increase in total wireless subscribers of 1.1 million in the fourth
quarter to reach 107.0 million in service. Subscriber additions for the quarter
included postpaid net adds of 780,000, the best gain in 12 quarters. Connected
device net adds were 246,000, and reseller net adds were 234,000. Prepaid had a
net loss of 166,000 subscribers primarily due to declines in GoPhone and
session-based tablets. Fourth-quarter postpaid net adds reflect accelerated
adoption of smartphones, sales of tablets and growth in Mobile Premise
services.

Branded computing subscribers, which are included in the previous
categories, reached a total of 6.4 million, up 26 percent from a year ago.
Branded computing devices includes tablets, tethering plans and other data-only
devices. Branded computing sales also have been slowed by the introduction of
Mobile Share plans, which include tethering. AT&T added almost 400,000
postpaid tablets in the quarter, with new subscribers and prepaid tablet
subscribers migrating to postpaid plans.

Smartphones Represent 89 Percent of Postpaid Phone Sales.
AT&T sold a record 10.2 million smartphones in the fourth quarter.
Smartphones represented 86 percent of postpaid device sales and 89 percent of
postpaid phone sales in the quarter. At the end of the quarter, 69.6 percent,
or 47.1 million, of AT&T's postpaid phone subscribers had smartphones, up
from 58.5 percent, or 39.4 million, a year earlier. AT&T’s ARPU for
smartphones is twice that of non-smartphone subscribers, and about 90 percent
of smartphone subscribers are on FamilyTalk®, Mobile Share or business plans.
Churn levels for these subscribers are significantly lower than for other
postpaid subscribers. About 55 percent of AT&T’s postpaid smartphone
customers now use a 4G-capable device.

In the quarter, the company activated a record 8.6 million iPhones, with 16
percent new to AT&T. The company also had its best-ever sales quarter for
Android smartphones.

More than 6.6 Million Postpaid Subscribers on Mobile Share
Plans. The number of subscribers on usage-based data plans (tiered
data and Mobile Share plans) continues to increase. More than two- thirds, or
31.7 million, of all smartphone subscribers, are on usage-based data plans.
This compares to 56 percent, or 22.1 million, a year ago and 31 percent two
years ago. More than three-quarters of customers on tiered data plans have
chosen the higher-priced plans.

Mobile Share plans continue to be popular. More than 6.6 million customers,
or 9 percent of postpaid subscribers, have already signed up for Mobile Share
plans. The number of Mobile Share accounts reached 2.2 million in the fourth
quarter for an average of about three devices per account. Take rates on the
higher-data plans continue to be much stronger than expected with more than a
quarter of Mobile Share accounts 10 gigabytes or higher.

Postpaid Churn Down. For the fourth quarter, postpaid churn
was 1.19 percent, down when compared to 1.21 percent in the year-ago fourth
quarter. Total churn was 1.42 percent versus 1.39 percent in the fourth quarter
of 2011.

Record Smartphone Sales Impact Margins. In the fourth
quarter, wireless margins reflected record- setting smartphone sales (800,000
more than fourth-quarter 2011), strong customer upgrade levels and the impact
of Superstorm Sandy. This was offset in part by further revenue gains from the
company’s high-value smartphone subscribers and improved operating
efficiencies. AT&T’s fourth-quarter wireless operating income margin was
14.5 percent versus 15.5 percent in the year-earlier quarter, primarily driven
by depreciation and amortization. AT&T’s wireless EBITDA service margin was
29.1 percent, or about the same as 29.2 percent in the fourth quarter of 2011.
Without the Superstorm Sandy impact, EBITDA service margin would have been
nearly 30 percent. (EBITDA service margin is operating income before
depreciation and amortization, divided by total service revenues.)

AT&T’s wireline operating income totaled $1.8 billion, up 1.8 percent
from the fourth quarter of 2011. Positive consumer revenue trends helped to
partially offset declines in revenues from business customers. Fourth-quarter
wireline operating income margin was 12.0 percent, compared to 11.7 percent in
the year-earlier quarter.

Consumer Revenue Growth Accelerating. Revenues from
residential customers totaled $5.5 billion, an increase of 3.0 percent versus
the fourth quarter a year ago and the strongest growth in more than four years.
Continued strong growth in consumer IP data services in the fourth quarter more
than offset lower revenues from voice and legacy products. The fourth quarter
marked the tenth consecutive quarter of year-over-year growth in wireline
consumer revenues. For full-year 2012, consumer revenues were up 1.9 percent
versus 2011.

U-verse continues to transform wireline consumer. IP revenues now represent
61 percent of wireline consumer revenues, up from 53 percent in the
year-earlier quarter and 45 percent two years ago. Increased AT&T U-verse
penetration and a significant number of subscribers purchasing multiple
services drove 17.7 percent year-over-year growth in IP revenues from
residential customers (broadband, U-verse TV and U-verse Voice) and 4.0 percent
sequential growth. Total U-verse revenues grew 36.3 percent compared with the
year-ago fourth quarter and were up 7.2 percent versus the third quarter of
2012.

Total U-verse Subscribers Reach 8 Million. Total U-verse
subscribers (TV and high speed Internet) reached 8.0 million in the fourth
quarter. U-verse TV added 192,000 subscribers to reach 4.5 million in service.
U-verse High Speed Internet delivered a fourth-quarter net gain of 609,000
subscribers to reach a total of 7.7 million, helping offset losses from DSL,
and for the first time, the company has more consumer U-verse High Speed
Internet subscribers than DSL subscribers. Overall, AT&T wireline broadband
subscribers were flat; however, total broadband ARPU was up more than 10
percent year over year.

Fifty-five percent of U-verse broadband subscribers have a plan delivering
speeds up to 12 Mbps or higher — up from 46 percent in the year-ago quarter.
About 90 percent of new U-verse TV customers also signed up for U-verse High
Speed Internet in the fourth quarter. About 70 percent of AT&T U-verse TV
subscribers take three or four services from AT&T. ARPU for U-verse
triple-play customers was more than $170, up year over year. U-verse TV
penetration of customer locations continues to grow and was at 18.7 percent at
the end of the fourth quarter.

Strategic Business Services Lead Wireline Business. Total
business revenues were $9.1 billion, down 2.1 percent versus the year-earlier
quarter and up 0.6 percent from the third quarter of 2012. Business service
revenues declined 2.3 percent year over year and were up slightly sequentially.
Business revenues were impacted by a slow economy and weak government and
business spending. Overall, declines in legacy products were partially offset
by continued growth in strategic business services. Revenues from strategic
business services, the next-generation capabilities that lead AT&T's most
advanced business solutions — including Ethernet, VPN, hosting, IP conferencing
and application services — grew 10.6 percent versus the year-earlier quarter,
continuing trends in this area. Total business IP data revenues grew 2.4
percent year over year, continuing the transition from legacy data products to
next-generation data services.

AT&T products and services are provided or offered by subsidiaries
and affiliates of AT&T Inc. under the AT&T brand and not by AT&T
Inc.

About AT&T
AT&T Inc. (NYSE:T) is a premier communications holding company and one of the most honored companies in
the world. Its subsidiaries and affiliates – AT&T operating companies –
are the providers of AT&T services in the United States and
internationally. With a powerful array of network resources that includes the
nation’s largest 4G network, AT&T is a leading provider of wireless, Wi-Fi,
high speed Internet, voice and cloud-based services. A leader in mobile
Internet, AT&T also offers the best wireless coverage worldwide of any U.S.
carrier, offering the most wireless phones that work in the most countries. It
also offers advanced TV services under the AT&T U-verse® and AT&T
│DIRECTV brands. The company’s suite of IP-based business communications
services is one of the most advanced in the world.

Cautionary Language Concerning Forward-Looking
Statements
Information set forth in this news release contains financial estimates and
other forward-looking statements that are subject to risks and uncertainties,
and actual results may differ materially. A discussion of factors that may
affect future results is contained in AT&T's filings with the Securities
and Exchange Commission. AT&T disclaims any obligation to update or revise
statements contained in this news release based on new information or
otherwise. This news release may contain certain non- GAAP financial measures.
Reconciliations between the non-GAAP financial measures and the GAAP financial
measures are available on the company's website at
www.att.com/investor.relations. Accompanying financial statements follow.

NOTE: EBITDA is defined as operating income before
depreciation and amortization. EBITDA differs from Segment Operating Income
(loss), as calculated in accordance with U.S. generally accepted accounting
principles (GAAP), in that it excludes depreciation and amortization. EBITDA
does not give effect to cash used for debt service requirements and thus does
not reflect available funds for distributions, reinvestment or other
discretionary uses. EBITDA is not presented as an alternative measure of
operating results or cash flows from operations, as determined in accordance
with GAAP. Our calculation of EBITDA, as presented, may differ from similarly
titled measures reported by other companies.

NOTE: Free cash flow is defined as cash from operations
minus capital expenditures. We believe this metric provides useful information
to our investors because management regularly reviews free cash flow as an
important indicator of how much cash is generated by normal business
operations, including capital expenditures, and makes decisions based on it.
Management also views it as a measure of cash available to pay debt and return
cash to shareowners.

NOTE: Adjusted Operating Income, Adjusted Operating
Expenses, Adjusted Operating Revenues, Adjusted Operating Income Margin and
Adjusted diluted EPS are non-GAAP financial measures calculated by excluding
from operating revenues, operating expenses and equity in net income of
affiliates certain significant items that are non-operational or non-recurring
in nature, including dispositions. Management believes that these measures
provide relevant and useful information to investors and other users of our
financial data in evaluating the effectiveness of our operations and underlying
business trends. Adjusted Operating Income, Adjusted Operating Expenses,
Adjusted Operating Revenues, Adjusted Operating Income Margin and Adjusted
diluted EPS should be considered in addition to, but not as a substitute for,
other measures of financial performance reported in accordance with GAAP. Our
calculations of Adjusted Operating Income and Adjusted diluted EPS, as
presented, may differ from similarly titled measures reported by other
companies.